Policy Studies Technology and Innovation

The U.S. International Trade Commission: An Empirical Study of Section 337 Investigations

by Charles Duan

Nov 22, 2021

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Author

Charles Duan

Senior Fellow

Key Points

While the ITC is supposed to stop foreign patent infringers that are outside the reach of U.S. courts, this has become a small fraction of the agency’s workload. Instead, the ITC is often used to pull American firms through duplicative litigation.

The ITC is failing to serve its goal of protecting American industries, instead being used increasingly by non-practicing entities that themselves do not contribute products or services to consumers.

The AAIA is an important first step that targets the problem of non-practicing entities at the ITC, but there is more to be done to prevent wasteful duplicative litigation between the ITC and district courts.

Press Release

International Trade Commission Reforms: How Far Should They Go?

INTRODUCTION

The smartphone patent wars over the last decade have put a spotlight on a little-known federal agency: the U.S. International Trade Commission (ITC). Originally a body for managing the federal system of trade tariffs, the ITC decides dozens of patent disputes a year, which is perhaps unexpected due to their authority over regulating unfair practices in importation.

Policymakers have raised questions about this little-known agency in view of reports of so-called “patent trolls,” otherwise called non-practicing entities, who take advantage of the ITC, and more recently because of a widely publicized dispute involving the ITC and national security. These questions led to a bill titled the Advancing America’s Interests Act, which was introduced in Congress to alter the ITC’s scope of authority over patents.

There is a need to supplement anecdotal evidence of ITC abuse with a broader review of the ITC’s workload, to see what reforms would be useful and effective over the agency’s range of operations. This study is an empirical review of the ITC’s unfair importation investigations, primarily relating to patents, over the last decade and a half. It looks at the nature of the parties involved, the connection between ITC investigations and domestic industries and the prevalence of non-practicing entities before the agency. The data supports the need for reforms to the ITC’s patent investigation practice to curtail abuses, reforms that are found in the AAIA. But the data also supports reforms that go further, limiting the ITC’s scope of authority to return it to the trade regulation agency it was intended to be rather than the general-purpose patent quasi-court that it has become.